While reading Graham Stewart’s Bang! in the corner of a pub I was approached by a fellow drinker. Pointing to the book’s subtitle, “a History of Britain in the 1980s”, he said: “I had no idea stuff that happened 30 years ago counted as history now.” He shook his head and shuffled off to the bar.

But Bang! very definitely is history. Partly this is because it fits squarely into the current publishing vogue for books about the British way of life during the second half of the 20th century. But more importantly, it is because Stewart’s book deals with the decade in which so much of modern Britain was formed.

Britain in the late Seventies was a stagnant, dissatisfied place. Great swathes of industry lay in the hands of the state, whose attempts to balance the demands of organised labour with economic stability had completely failed. Inflation and unemployment were both rampant. The government was a prisoner of the unions. Despite the revolution of the Sixties, social mores remained faintly stiff and old-fashioned. Fashion was the pits. Society was divided, a fact mirrored by the absence of a meaningful centre-ground in politics, where the two main parties split between Tory squirearchy and a Labour party whose instincts erred closer to Trotskyism than social democracy.

Then along came Mrs Thatcher. Her improbable assumption of power in 1979, her even more unexpected retention of it in 1983 and her historic second re-election in 1987 brought about the most transformative period in British politics, culture and society since the Second World War.

Thatcher’s government brought monetarist economics, an aggressive foreign policy, the privatisation of industry and a commitment to shrinking the state and empowering enterprise – or as her detractors had it, encouraging greed.

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Her government was as transformative as it was divisive. Inflation was eventually tamed, but it was a ruinously painful process. Unemployment was also controlled, after a fashion, although it was entrenched for generations in those areas of the country where heavy industry was forcibly abandoned. Victory in the Falklands was a tonic for the nation’s self-importance, but it marked the end of Britain’s ability to take unilateral military action overseas.

The sell-off of industry (and North Sea oil) certainly shrank the size of the state’s broadest economic obligations, but the national budget was bloated, as is now apparent, by a permanently expanded welfare sector. Most famously, Thatcher created a generation of home owners and a booming financial sector – the two factors that probably had the greatest direct effect on national prosperity until the crash of 2007/08. Now, though, home owning is once again impossible for many young people, and the fact that Britain’s economy is so reliant on the City seems increasingly a source of imbalance rather than strength.

So the legacy of the Eighties is still stamped on Britain, for better and worse. To those who hated Thatcher and everything she stood for, she remains the symbol of Tory heartlessness. Yet politically, Thatcher’s way is now effectively the centre ground, and has been ever since 1997 when Blair, who was Labour’s Thatcher, inherited power.

In describing all this, Stewart has written an accomplished, politically minded history of a decade in which Britain was painfully reborn. He is generally sympathetic to Thatcher, although not a toady or an apologist. He is strong on the Falklands and North Sea oil, as well as – understandably for the official chronicler of The Times during the Murdoch era – the press. His digressions into fashion, technology, music, television, film or home computing flow from his political account.

If one thing stands out it is just how far general interest in politics has sunk since the time Stewart describes. Then, a turnout below 75 per cent in a general election was considered low (the turnout in 2001 was 59.4 per cent), by-elections were exciting media events, and pop stars could write avowedly political songs and still hope to top the charts, as did Frankie Goes to Hollywood with Two Tribes in 1984. Sitcoms such as The Young Ones could include only lightly masked political rants from comedians like Ben Elton and Alexei Sayle which one could hardly imagine today from, say, Miranda Hart. Strange.